MOROCCO - oecd.org · The textile and clothing industry is focused strongly ... despite the delayed privatisation of Maroc Télécom, whose proceeds had been earmarked for the 2000

Morocco

Rabat

key figures• Land area, thousands of km2 : 446• Population, thousands (2000): 29 878• GDP per capita, $ (2000): 1 120• Life expectancy (1995-2000): 66.6• Illiteracy rate (2001): 50.1

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MOROCCO’S ECONOMY HAS GROWN quite slowly inrecent years, with real GDP rising an average 2.8 percent a year (1.6 per cent per capita) between 1997 and2000. It also showed irregular movements due to erraticagricultural performances. The decline of socialindicators and widening of inequalities are an obstacleto sustainable growth. Higher investment (funded bymoney from privatisation) and public sector wages,along with a 5 per cent devaluation of the dirhamagainst the dollar, should boost real GDP by about

4.8 per cent in 2001, though at the cost of someinflationary pressure (2.1 per cent). A continuing policyof reviving public investment and a new devaluationof the dirham (5 per cent) may produce higher real GDPgrowth in 2002 (5 per cent) with lowerinflation (1.6 per cent). But a fairly substantialtrade deficit (around 9 per cent of GDP) islikely because of a volume of imports drivenby increased demand and a still high realeffective exchange rate.

Morocco’s economy has grown quite slowly in recent years

-10

-6

-2

2

6

10

14

1995 1996 1997 1998 1999 2000 2001(e) 2002(p)

Figure 1 - Real GDP Growth

Source: Authors’ estimates and predictions based on data from the Direction des statistiques du Maroc.

Recent Economic Developments

The primary sector accounts for 16 per cent ofdomestic value added and employs 48 per cent of theworking population. Agriculture is very much at themercy of the weather (only 13 per cent of cultivatedland is irrigated) and is dominated by small plots usinghardly any machinery. Large modern farms mainlyproduce export crops (fruit and vegetables and citrus)and much of the irrigated land is in their possession.

In 2000, 73 per cent of the fertile agricultural areawas given over to cereals and 22 per cent to export

crops. Two consecutive years of drought damaged cerealproduction. Total agricultural output fell 49 per centbetween the 1998/99 and 1999/2000 seasons andpersistent drought in 2001 is thought to have wipedout crops equivalent to a fifth of the cultivated land.Citrus production grew by 7 per cent, however,illustrating the country’s two kinds of agriculture —one of them irrigated, expanding and geared to foreignmarkets and the other old-fashioned and aimed atdomestic consumption.

Fishing has much potential for growth. The non-renewal of agreements with the European Union (and

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Russia) in December 1999 meant Moroccan boatscould now fish all the country’s territorial waters andthe national catch grew in volume by 20 per cent in2000. Since 1997, the government has beenmodernising and expanding the fleet and port facilitiesin the hope of doubling production between 1999 and2003. The programme could create up to 100 000jobs.

Mining is dominated by phosphates, of whichMorocco is the world’s third largest producer andleading exporter. The sector is in the doldrums after a7 per cent fall in export volume in the three years sincethe peak year of 1997.

The secondary sector accounts for about 30 per centof GDP and employs 20 per cent of the workforce. Ithas grown a modest average of 3 per cent a year since1997. Manufacturing industries represent two-thirdsof the value added of the sector and comprise foodprocessing (36 per cent), chemical and para-chemicalindustries (32 per cent), textiles and clothing (17 percent) and mechanical and metallurgical industries(12 per cent).

Food processing has grown strongly in recentyears — 15 per cent between 1997 and 2000 and 5 percent during 2000 — but the sector is dominated byfamily firms and not very competitive.

The chemical and para-chemical industry isdownstream of the mining sector and mainly turnsphosphates into fertiliser and phosphoric acid forexport. Phosphoric acid and fertiliser alone account for12 per cent of all exports. The sector’s production hasgrown 10 per cent since 1997 (3 per cent in 2000),showing the state-owned Moroccan PhosphatesAuthority’s determination to boost the sector’s domesticvalue added by increasing output of by-products.

The textile and clothing industry is focused stronglyon exports (accounting for 34 per cent of the total) andhas to face the very competitive conditions of the worldmarket. The sector has been handicapped by the risein the real value of the dirham and will have to preparefor the dismantling of the multi-fibre agreements, tobe completed in 2005. The sector had to shed 44 000jobs in 1999 — 23 per cent of its total and 3 per centof all industrial employment.

Since 1997, construction has been the most dynamicsector, with an average real growth of 5 per cent (6 percent in 2000), largely fed by a 1994 governmentprogramme, backed by international funding agencies,to build cheap housing to replace slums.

The tertiary sector, which employs 32 per cent ofthe working population and accounts for 54 per centof GDP, has grown fastest of all in real terms in the past

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

■ Africa ■ Morocco

0

200

400

600

800

1000

1200

1400

Figure 2 - GDP Per Capita in Morocco and in Africa ($ current)


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-3 -2 -1 0 1 2 3

Agriculture, forestry and fishing

Mining

Manufacturing

Construction

Energy

Transport, communications and commerce

Government services

Private services

GDP

■ Volume ■ Price ■ Value

Figure 4 - Sectoral Contribution to GDP Growth in 2000


Mining

Agriculture,forestry and fishing

Manufacturing

Energy

Construction

Transport,communications and commerce

Private services

Governmentservices

18%

14%

27%

2%

7%5%

14%

13%

Figure 3 - GDP by Sector in 2000


few years, especially (since 1997) transport/commu-nication (+28 per cent) and commerce (+19 per cent).

The communications sector is being thoroughlyrestructured. The state monopoly, Maroc Télécom, wasbroken in 1999 by sale of a GSM licence. The firm wasopened up and Vivendi took a 35 per cent share in early

2001. Two more private telecommunications licences(one mobile and one fixed) are expected to be offeredby 2003 and another 15 per cent of Maroc Télécomshould be up for sale.

Tourism, the country’s main source of foreignexchange, is expanding rapidly and grew by 13 per

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cent in current dirhams in 2000 (29 per cent since1998). The sector has room for further growth. Thetotal present capacity is 95 180 beds, while neighbouringTunisia has about 185 000. The Moroccan government

has been encouraging the sector with tax breaks andprivatisation of state-owned hotels. Several investmentprojects are under way, notably in the Agadir andMarrakesh regions.

Table 1 - Demand Composition (percentage of GDP)

Source: Authors’ estimates and predictions based on IMF and domestic authorities’ data.

1995 1998 1999 2000 2001 (e) 2002 (p)

Gross capital formation 21.3 22.2 23.4 24.3 23.5 23.6Public 3.7 2.7 2.9 3.0 3.3 3.3Private 17.6 19.4 20.5 21.3 20.2 20.4

Consumption 85.2 86.1 85.1 86.8 86.4 85.7Public 17.3 18.0 19.2 19.4 20.8 20.4Private 67.9 68.1 66.0 67.4 65.6 65.3

External sector -6.5 -8.3 -8.6 -11.0 -9.9 -9.3Exports 27.2 17.7 18.9 20.2 19.7 20.1Imports -33.7 -26.0 -27.5 -31.3 -29.6 -29.4

Real growth of domestic income, at 5 per cent, hasbeen mostly driven by household consumption. Theincrease in investment slowed in 2000 (by 3 per centin real terms) after several years of sustained growth.Real public investment grew 7 per cent in 2000, butits share in GDP is still small. The faster expansion ofdomestic demand rather than GDP shows a supplyshortage and has resulted in increased imports andthus a bigger foreign trade deficit.

Macroeconomic Policy

Budgetary and Monetary Policy

The state budget has been almost balanced in recentyears and even showed a surplus in 1999 after the saleof the second GSM licence. But 2000 ended with adeficit equal to nearly 6 per cent of GDP because thegovernment decided to stick to its spending plansdespite the delayed privatisation of Maroc Télécom,whose proceeds had been earmarked for the 2000budget. Normally, the country’s budget is hamperedby the size of current expenditure (75 per cent of thetotal in 2000), which leaves little money for publicinvestment and structural reform. The main reason isthe enormous wage bill for 770 000 civil servants (8 per

cent of the total workforce) that absorbs 40 per centof total expenditure (12 per cent of GDP). Interest onexternal debt, although declining, is still high at 17 percent, while consumer price subsidies for energy and foodstaples take up 6 per cent. Public investment accountsfor only 17 per cent (just under 6 per cent of GDP in2000) but is rising because of the new Hassan II Fundto which most privatisation proceeds are channelled andwhich has set improving public infrastructure as apriority.

The burden of current expenditure is expected togrow in the short term. Devaluation should increaseboth the public external debt service and price subsidiesfor imported goods (oil and especially cereals). Thesystem of subsidies was however pared down becausethey were becoming too onerous for the governmentafter the rise in oil prices in 2000. The 10 per centincrease in the minimum wage in October 2000 andgiving a number of civil servants job tenure automaticallyraises the cost of public-sector wages.

Liberalisation of the banking sector (abolishingcredit control in 1991, liberalising interest rates onoverdrafts in 1992 and on accounts in credit in 1996)and an expansionist monetary policy (reducingintervention rates of the central bank on the money

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Table 2 - Public Financesa (percentage of GDP)

a. Until 2000, the financial year was from July to June, so calendar-year periods do not correspond with budget periods.b. Only major items are reported.Source : Authors’ estimates and predictions based on IMF and domestic authorities’ data.

1995 1998 1999 2000 2001 (e) 2002 (p)

Total revenue and grantsb 23.8 24.4 29.3 24.7 28.6 26.0Taxes 21.5 21.8 23.6 22.6 21.1 21.3

Total expenditure and net lendingb 28.9 28.2 28.5 30.6Current expenditure 22.0 22.3 22.3 23.0

Excluding interest 16.1 17.1 17.2 17.8 19.1 18.6Wages and salaries 11.1 11.4 11.9 11.8 12.5 12.1Interest payments 5.9 5.2 5.1 5.2

Capital expenditure(including Hassan II Fund) 5.5 4.5 5.1 5.6 6.0 6.0

Primary balance 0.8 1.3 6.0 -0.6 1.9 -0.2Overall balance -5.1 -3.8 0.9 -5.9

market and reducing reserve requirements) hassubstantially cut interest rates. The central bank’s averagenominal intervention rate has fallen by 144 basis pointssince 1997 and reached 5.1 per cent in 2000 (3.2 percent in real terms). The banks’ nominal minimumlending rate dropped by 200 basis points over the sameperiod to the present 7.2 per cent (5.4 per cent in realterms) for loans shorter than two years. Credits to theeconomy rose from 50 to 60 per cent of GDP between1997 and 2000 (7 per cent up in 2000). Apart fromlower interest rates, the growth of credits to the economywas helped by reduced bank credits to the government(their share of GDP fell by 10 per cent between 1997and 2000). As a result, growth of the M3/GDP ratioheld up in recent years (14 per cent since 1997 and 5 percent in 2000) but still did not stoke up inflation, whichremained modest, at 1.9 per cent in 2000 compared with0.7 in 1999. The effect on prices of the April 2001devaluation, minor so far, will determine whether theexpansionist monetary policy is maintained. The centralbank’s aim is to limit annual inflation to 2.5 per cent.

The value of the dirham is pegged to a basket ofcurrencies whose weighting was changed in April 2001,leading to a devaluation of about 5 per cent. This wasdone in a context of a deteriorating trade balance andlower duties on imports from Europe, as well aspersistent pressure from the textile and clothing sector(whose union called for a 10 per cent devaluation). Thesteadiness of prices and lighter external debt helped too.

The real impact of devaluation on macroeconomicequilibrium cannot yet be judged, but it is evidentlynot enough to restore the price-competitiveness ofMoroccan exports. The real effective exchange rate in2000 was 22 per cent higher than at the time of thelast devaluation in 1990.

External Position

With the new round of World Trade Organisationtalks and the opening up of the Moroccan marketthrough free trade agreements between the EuropeanUnion and the Mediterranean countries, Morocco iscoming up against stiffer competition in domestic andforeign markets. But it may also be able to sell moreof its farm products in Europe.

In 2000, the country’s trade balance took a drasticplunge (to a 34 per cent deficit in current dirhams,according to official figures) due to a faster growth ofimports (15 per cent) than exports (7 per cent), andexport coverage of imports fell to 64 per cent. Oilproducts (12 per cent of all imports) and cereals (6 percent) were the main sources of import growth. The oilbill should diminish in the long run because of thediscovery of unproven reserves of oil and natural gasthat could supply the country for between 15 and30 years. But extraction at the site, known as SidiBelkacem 1, may not start until 2003. The growth ofcereal imports is due to the fall in domestic production

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Table 3 - Current Account (percentage of GDP)

Source: Authors’ estimates and predictions based on IMF and domestic authorities’ data.

1995 1998 1999 2000 2001 (e) 2002 (p)

Trade balance -7.5 -6.5 -6.9 -9.0 -8.2 -7.6Exports of goods 20.7 19.9 21.3 22.5 22.2 22.6Imports of goods -28.1 -26.4 -28.2 -31.5 -30.3 -30.2

Services balance 0.8 2.4 3.1 3.3Factor income -4.0 -2.9 -2.8 -2.8Current transfers 7.1 6.5 6.1 6.8

Current account balance -3.6 -0.4 -0.5 -1.7

because of drought. Imports of capital goods (21 percent of all imports) dropped sharply by 9 per cent in2000, confirming the slowdown of private sectorinvestment.

Exports were driven by the fishing sector, whichaccounts for 10 per cent of the total. Clothing exports(32 per cent of the total) only grew 2.7 per cent becauseof the rise in the real value of the dirham and theopening of the European market to other exportingcountries. Exports from the phosphate sector

(phosphates, phosphoric acid and fertiliser), whichaccounted for 17 per cent of the total in 2000, fellslightly in value.

The trade deficit was mostly made up for by invisibleitems such as tourism and remittances by Moroccansliving abroad, which are a substantial source of foreignexchange. The two sectors grew by 13 and 18 per centrespectively in 2000 (in dirhams). Reduction of externaldebt service meant the current account deficit couldbe kept to 1.7 per cent of GDP in 2000.

Apart from privatisations and franchises, foreigndirect investment remains small in Morocco andbureaucratic red tape, lack of legal security and politicaland social uncertainty are cited as the main obstaclesto its development. Growth of tourism and the oilsector, as well as continued privatisation of stateenterprises, should however increase it in the short tomedium term.

The proceeds of privatisation and the equilibriumof the current account have helped boost foreignexchange reserves by 57 per cent (in dollars) between1995 and 1999 (28 per cent in 1999 because of thesale of a GSM licence). The reserves fell by 15 per centin 2000 but rose again the following year owing to thepart sale of Maroc Télécom. They were equal to5.5 months of imports at the end of 2000 (comparedwith seven months in 1999).

Owing to several reschedulings of the debt to theParis and London Clubs since 1983, efforts atadjustment since the early 1980s and implementation

of bilateral debt reconversion procedures, new drawingshave been less than repayments, so the country’s externaldebt has been reduced since 1985 and is now at asustainable level. The ratio of debt to GNP in 1999was 56 per cent and of debt service to exports 24.3(compared with 71.6 per cent and 33.4 in 1995). Thereis no danger of illiquidity because foreign exchangereserves are currently equivalent to about 22 monthsof external debt service.

Just over a third of Morocco’s external debt is tomembers of the Paris Club and another third tointernational funding institutions. The share of bilateralcreditors is diminishing as debt reconversion proceeds.Since 1996, France, Italy and Spain have done debtequity swaps amounting to slightly more than$600 million (just over 3 per cent of the official debtstock in 1995). The Moroccan government has beenactively managing its debt since 1997 by using the fallin interest rates on capital markets and issuing eurobondson the international financial market so as to pay offhigher-interest loans taken out earlier. In the second

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half of 2000, a €500 million eurobond issue was floatedby the government.

Structural Issues

Until March 2000, Morocco enjoyed EuropeanUnion trade preferences. The new free trade agreementon Barcelona terms (which Morocco signed in 1996)introduces for the first time reciprocal tariff preferencesfor industrial goods between the EU and theMediterranean countries. In fact, because the earlier EUpreferences were larger, the agreement means Moroccolowering its tariffs for industrial imports from EUcountries. Complete liberalisation of the market shouldbe achieved by 2012. Agriculture and fishing arecurrently excluded from the agreement but will bedealt with in the coming negotiations. Paradoxically,the present trade agreements between Morocco and theEU encourage cereal production while discouraging

citrus and fruit and vegetables where Morocco has agreater comparative advantage1.

Liberalisation of industrial trade will not be uniform.Duties and taxes on imported goods Morocco doesnot produce will be cut more quickly than on goodscompeting with local products. For the secondcategory — mainly food products, minerals, electricalequipment and vehicles — the market will not beginto be liberalised until 2003 and the tariff reduction willbe over ten years, at a rate of 10 per cent a year. Dutieson other imports will be reduced 25 per cent at a timeand two such cuts have already been made (in March2000 and March 2001). Machinery imports howeverwere completely liberalised on 1 March 2000. So forthe time being, the Moroccan economy’s level ofprotection has in fact risen somewhat.

The close ties between Morocco and the EU (whichtakes three-quarters of its exports and supplies two-

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

■ Debt/GNP —— Service/X

0

20

40

60

80

100

120

Figure 5 - Stock of Total External Debt (percentage of GNP)and Debt Service (percentage of goods and services)

Source: World Bank (2001), Global Development Finance.

1. Duties imposed by Morocco on cereals from the EU are set at 144 per cent for the fairly small import quotas involved and are even

higher outside the quotas. The expansion of the citrus and fruit and vegetable sector is restricted by seasonal import quotas imposed

by the EU. The next round of EU-Morocco negotiations will tackle these points.

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thirds of its imports), mean that the tariff agreementsshould have a considerable effect on the country’seconomy. But import duties account for 18 per centof tax revenue, which means reducing them will obligethe government to reform the tax system. Morocco’sindustrial output could also be seriously damaged bycompetition from European goods. The governmenthas moved to increase competitiveness and moderniselocal small and medium-sized firms, but does not seemto be having much success.

The government has launched a programme torebuild the country’s economic structures, involvingreform of the labour market, privatisation of state-owned firms and services and encouraging foreigndirect investment.

Competitiveness of industrial goods has declinedin recent years as wage costs have risen and the real valueof the dirham has increased. As a result, the governmenthas begun revising the labour laws to make the jobmarket more flexible. However, social pressures suchas high unemployment and poverty led in April 2000to a collapse of negotiations over a new labour codebecause of disagreement about conditions of lay-offs.But the lack of competitiveness of the local workforceis not so much about wages as lack of skills, so Moroccanfirms will be in better shape on this score when educationand vocational training improve.

The leading privatisations have been in tele-communications, with the sale of part of Maroc Télécomand deregulation of the sector. The next major opening-up of a state company is set for 2002, when 40 per centof Royal Air Maroc will go on sale. About 50 firmsremain to be sold off. Sixty or so have been divested sincethe first privatisation law in 1990, earning the governmentsome $3.9 billion since 1993, including $2.2 billionfrom opening up Maroc Télécom. The state is graduallywithdrawing from electricity and water-supply by offeringfranchises to the private sector, such as to build a powerplant at Tahaddart and supply electricity and water tothe Tetuan-Tangier region and water for Casablanca.

Wholesale reconstruction is under way in thebanking sector, with the government partly involved

in financial rehabilitation of three state-owned banksto prepare for future privatisation. One of them, CréditImmobilier et Hôtelier, has been hard hit by corruptionand embezzlement scandals. The amount of legallydubious deposits with the bank has forced thegovernment and a group of nine small banks toguarantee its operations. The central bank, BanqueCentrale Populaire, the country’s largest, may beprivatised in 2002.

Since the mid-1990s, the government has beenpushing local and foreign private investment. The effortincludes setting up duty-free industrial zones, aninvestment charter in 1995, a commerce law in 1996and a business court in 1997. Laws grant many taxexemptions to encourage investors, especially foreignersand formalities have been reduced, with one-stopfacilities for new investors. But procedures are stillcumbersome: official decrees take a long time to beenacted and laws do not seem to be applied. The freezones are still at the early stages. The principal one willbe in Tangier but is being held up by delays in renovatingthe port there because of a row between the governmentand the French construction firm Bouygues. Land-owning is also complicated by outdated practices andbuying land to build on can take months or even yearsdepending on its legal status. The private sectorcomplains about very unreliable legal guarantees forinvestments because of corruption, so the weight ofbureaucracy and its inefficiency is clearly a majorobstacle to the country’s development.

Political and Social Context

The late King Hassan II took a long time to startmoving towards democracy and then only did so verycarefully, retaining effective power while setting up amulti-party parliamentary system. But in March 1998,for the first time, he appointed an opposition figure(and veteran moderate left-winger), Abderrahmane el-Youssoufi, as Prime Minister. The king’s death in July1999 seemed to speed up democratisation. His eldestson and successor, Mohammed VI, was soon nicknamed“King of the Poor” by Moroccans, who had great hopesof social progress and political freedoms. The new king

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allowed political exiles to return, declared in favour ofequal rights for men and women and fixed newparliamentary elections for November 2002.

However, since these first symbolic gestures, politicalliberalisation and social reform seems to have been puton hold. The media is still not allowed to criticise theking, discuss the role of Islam, or comment on humanrights violations and the government’s policy on WesternSahara. The issue of phosphate-rich Western Sahara,taken over by Morocco when Spanish colonial forcespulled out in 1975, is a thorny political issue and sourceof constant tension with neighbouring Algeria. A cease-fire was signed in 1991 with the Polisario Front pro-independence movement and Morocco agreed to holda UN-supervised referendum on the future of theterritory. The vote was originally set for 1992, but hasbeen postponed because of disagreement over who cantake part.

Other substantial blocks to progress are corruptionand administrative rigidity. The presence of the stateeverywhere in the economy has led to corruption andunfair competition. The slowness of legal reform anddelay in revamping the electoral system confirms theimpression of an unpredictable legal environment.However, the government’s stated determination since1998 to fight corruption has already produced someresults. A conference on morality in public life washeld in June 1999, corrupt civil servants were dismissedand reforms were made in the state accounts court, thelegal system, the method of bidding for governmentcontracts and in the customs and tax departments.The clean-up of public life was supported by thenational business confederation and many NGOs. In2000, Morocco was 37th (level with Mauritius) onTransparency International’s 100-nation index of theperceived degree of corruption in a country. Thisrespectable position, compared with other countries inAfrica, is proof of the government’s success in tacklingthe problem.

The decline in the general standard of living couldhowever endanger the country’s social and politicalstability. A general strike, averted at the last minute inearly 2001, is still being threatened by the trade unions,

forcing the government to be conciliatory and suspendits programme to reduce the number of governmentworkers. The risk of serious disturbances is greaterbecause hopes raised by the political changes since1998 have not been fulfilled. Since the early 1990s,poverty in Morocco has deepened and inequalities havewidened. Morocco was only 112th on the UN HumanDevelopment Index in 2001, behind the rest of NorthAfrica and Egypt though ninth among Africa countries.

The recent slowdown in growth increased thenumber of poor people (those living below the nationalpoverty line) by half — from 13 per cent in 1997 to19 per cent in 1999. Inequality is striking. The poorest10 per cent have only 2.6 per cent of the country’swealth while the richest 10 per cent own 30.9 per centof it. Three-quarters of the poor live in the countryside,where persistent drought hits their income fromfarming. Malnutrition among children under five in1997 was four times greater in rural areas (12 per cent)than in the towns (3.3 per cent), according to theUNDP. These figures are similar to those in LeastDeveloped Countries (LDCs). The area from the eastof the country to the edge of the Sahara is a band ofpoverty with poor basic infrastructure, inadequateeducation and low incomes.

The level of urban unemployment (22 per cent in1999) is very high and worse among women (27.6 percent) than men (20.3 per cent). The highest rates areamong people under 34 (30.3 per cent in 2000) anduniversity graduates (29 per cent). Current trends areworrying, with urban job-seekers growing annually by5 per cent while the number of jobs increases by only4 per cent. The economy will have to grow between 6to 8 per cent a year to create the 200 000 extra jobsneeded both to absorb the 150 000 people who comeonto the urban job market every year and to startreducing unemployment.

Although life expectancy at birth has improved (69years now compared with 64 in 1993) and averageprimary school enrolment has doubled since the 1960s,Morocco’s performances in health care and educationare far behind those of countries with similar incomelevels. Infant mortality was about 45 per 1 000 in

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1999, compared with the average of 35 for the MiddleEast and North Africa (24 in Tunisia, 36 in Algeria and41 in Egypt). The health situation in the countrysideis especially bad, with only half the population havingaccess to proper medical care.

Morocco’s illiteracy rate is one of the highest inthe Arab world — 50 per cent among adults (peopleover 15). The figure is 44 per cent in Egypt, 31 inAlgeria and 28 in Tunisia. Rural areas are far behindin school enrolment of children between seven and13, with 26.9 per cent never having been to school,compared with 3.3 per cent in the towns. The mostvulnerable Moroccans are women and girls in thecountryside. Only 51 per cent of girls between sevenand 12 attend school, compared with 74 per cent ofboys (90 per cent are in school in towns). Fewer than15 per cent of rural women are thought to be literate.

Despite government efforts, public spending onsocial sectors is still small compared with the rest ofNorth Africa. In 1998, health care spending was 1.2 percent of GDP in Morocco, against 2.6 in Algeria and2.2 in Tunisia. For education, the figure was 5.3 per

cent of GDP in 1997 compared with 7.7 in Tunisia.However, since Mohammed VI became king, the fightagainst poverty has become a government priority, withan emphasis on rural development through investmentin basic infrastructure (roads, electricity, irrigationsystems and activity generating jobs and income) as wellas a serious rural literacy programme.

An informal education programme has beenlaunched to teach children between eight and 16 whohave never been to school how to read and write. Ruralincomes are expected to improve thanks to a micro-credit and insurance programme backed by theHassan II Fund, which is funded by the proceeds ofprivatisation and co-ordinated by the SocialDevelopment Agency. Meanwhile the governmentseems determined to transfer some decision making todecentralised authorities — the 1 547 towns legallyrecognised as important agents of local development,the 44 rural provinces and 24 urban prefectures thatsupervise local government and the 16 regions thatoversee in turn the development of the provinces andprefectures. But so far very little power has been handedover to local elected officials.

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